is forex 'manipulated'

[cablemonster]

I would like to start an adult discussion on this, of course the word 'manipulated' means different things to different people.

here is a case in point. I am currently writing this at 4.20pm London time we have around 5 hours to run on the FX markets (or thereabouts).

the majority of retails punters are short the EURUSD (58% indicated by Oanda) and are likely to have their stops tucked behind 1.34. Going into the end of the week it would be nice for the larger players to get 1.34 to print as they could hoover up the retail positions.

The hourly time frame has just printer a juicy bearish pin bar to suck in some more people short.

I am not saying it is going to happen just that this would be the ideal scenario for the institutions and their clients (brokers).

lets see what happens

 

[cablemonster]

here is the hourly chart

 

[Trader333]

Manipulation can only ever really work on a short term basis in my view. We have seen what happens when it is tried on a longer time frame and the cost of attempting to do so.

 

[BobbyBB]

I think you're giving too much credit to 'institutions and their clients'. They might be far bigger than the average retail client but believe me, working out of a big office for a big name doesn't make you that much better. Most of the money they make is from charges and working the bid-offer spread.

Of course there are some excellent traders working in these firms but for every one of them, there will be 50+ jabronis.

 

[BeginnerJoe]

Manipulation can only ever really work on a short term basis in my view.

What would be your definition of short term ?

 

[rob the bank]

Make your own mind up here is the EURUSD chart from today. The banksters aren't going to let you get your hands on their loot - remember it's a zero sum game. We lose and they get our cash.

 

[cablemonster]

i have no idea what will happen in the next few hours but what I do know is that the institutions and their clients (brokers et al) would love 1.34 to print as it would be like taking candy from a baby.

 

[Trader333]

I do know is that the institutions and their clients (brokers et al) would love 1.34 to print as it would be like taking candy from a baby.

Who would they be taking the candy from ?

 

[Triggerfish]

.....the word 'manipulated' means different things to different people.

Can someone define what "manipulation" means? A good description would be ideal on exactly what it is.

 

[cablemonster]

Who would they be taking the candy from ?

they (dealer brokers) would be taking the candy from their customers. The institutions make a profit from the brokers.

 

[malaguti]

Can someone define what "manipulation" means? A good description would be ideal on exactly what it is.

Thats not difficult..
"controlling someone or something to your own advantage, often unfairly or dishonestly"

 

[Shakone]

Well you have central banks intervening publicly (sometimes not publicly too), and so yes there definitely is some level of manipulation going on in forex.

 

[Triggerfish]

So how does manipulation work exactly?.....and what effects does it have on the charts? if any?.....and why would they do it?

 

[cablemonster]

So how does manipulation work exactly?.....and what effects does it have on the charts? if any?.....and why would they do it?

price is 'manipulated' by removing liquidity from the market in the direction you want it to go. to remove liquidity you must either consume it or not provide it, that's assuming that the amount your provide is meaningful in the first place.

why do they do it? money.

 

[tar]

Stop hunting is part of the game and it is part of the price discovery process , it happens in all markets not just FX , but it is not like "hey lets push it up to get the retail traders " nobody care about retail punters they just represent 2% of the FX volume , first of all it is costly to push a major currency up just to hunt some stops , second most retail traders dont use stops , third there is another world beside the retail , which represents most of the FX volume , so maybe it could be more reasonable just to hunt for these big stops instead of the retail's , and that what happens every day but i wouldn't call it manipulation it is just how it is , and it is part of the price discovery process . And BTW oanda's book and stops is just internal and has nothing to do with the real FX market !

 

[Triggerfish]

price is 'manipulated' by removing liquidity from the market in the direction you want it to go. to remove liquidity you must either consume it or not provide it, that's assuming that the amount your provide is meaningful in the first place.

why do they do it? money.

ok, what do you mean by direction you want it to go?.....so can manipulation be SEEN in the charts?.....and is it LEGAL?

 

[wackypete2]

Stop hunting is part of the game and it is part of the price discovery process , it happens in all markets not just FX , but it is not like "hey lets push it up to get the retail traders " nobody care about retail punters they just represent 2% of the FX volume , first of all it is costly to push a major currency up just to hunt some stops , second most retail traders dont use stops , third there is another world beside the retail , which represents most of the FX volume , so maybe it could be more reasonable just to hunt for these big stops instead of the retail's , and that what happens every day but i wouldn't call it manipulation it is just how it is , and it is part of the price discovery process . And BTW oanda's book and stops is just internal and has nothing to do with the real FX market !

Good post. Some real manipulation does occur though by the large banks. They know where retail herd stops are. It's not had to guess even if they don't see all the orders. The banks all talk to each other and get a feel where each other needs to send the price. They then can grab all the stops before moving the price. As Trader33 said this is a short term issue. GammaJammer's excellent article here (often referenced!) is worth the read.

Peter

 

[wackypete2]

What would be your definition of short term ?

I this case short term refers to how long it takes for the event to complete and not what time frame chart any of us are looking at. Most often the event is completed in 5 -15 minutes. We can look at manipulation as an order fulfillment process. Retail traders have orders in (stops) and the bank's or broker's job is to fill those orders.

Peter

 

[BeginnerJoe]

I this case short term refers to how long it takes for the event to complete and not what time frame chart any of us are looking at. Most often the event is completed in 5 -15 minutes. We can look at manipulation as an order fulfillment process. Retail traders have orders in (stops) and the bank's or broker's job is to fill those orders.

Peter

My observation of manipulation is that it can go on as long as they want it to go on. The players behind that are way bigger than most can imagine. It takes money and connections. The two are related when there is a sure bet to be had. This is why you have stops because there is no limit to how much and for how long the manipulators can push the price in any particular direction. Because of your stops, the manipulators have good reasons to push prices. Essentially you are in the wrong end of the game and why 95%, 99.5% of people playing with the manipulators loose.

 

[wackypete2]

My observation of manipulation is that it can go on as long as they want it to go on. The players behind that are way bigger than most can imagine. It takes money and connections. The two are related when there is a sure bet to be had. This is why you have stops because there is no limit to how much and for how long the manipulators can push the price in any particular direction. Because of your stops, the manipulators have good reasons to push prices. Essentially you are in the wrong end of the game and why 95%, 99.5% of people playing with the manipulators loose.

Generally manipulation refers to short term gains. What you are describing is more like Tar's post. Most people wouldn't call it manipulation, but as he says, price discovery. It does go on whether you call it A or B doesn't really matter. For large banks to keep prices moving or pegged artificially for longer periods of time is extremely expensive and risky to them. It is however easier but still risky for sovereign countries to manipulate their own currency when they can print unlimited amounts of it.

Failure = Bank of England 1992
Success = Swiss Frank current peg

Peter